EuroChem Group AG is delaying the start of commercial production at its VolgaKaliy potash operation in Russia’s southern Volgograd region. The group has come up against “geological problems” that do not affect the final parameters of the project but do affect the time frame, according to an Interfax report citing the group’s primary shareholder, Andrey Melnichenko, at last week’s St Petersburg International Economic Forum.
As late as last November, EuroChem was targeting first production at VolgaKaliy for the first half of 2019 (GM Nov. 30, p. 27).
VolgaKaliy produced its first test concentrate in July of 2018 and a total of 5,300 mt of product in the fourth quarter. A spokesperson for the group this week confirmed to Green Markets that EuroChem is continuing to test processes at the plant with batch production.
Melnichenko said the group expects the beginning of commercial production at VolgaKaliy next year, but it is too soon to be clear on what output might be, according to the report.
A EuroChem spokesperson told Green Markets the test mode will continue for some time, and “much depends on how quickly the problems are solved,” adding that he was unable to provide further clarification on expected production at VolgaKaliy next year.
The spokesperson declined to elaborate on the “geological problems” at the operation. VolgaKaliy’s cage shaft, which is not connected to the rest of the mine, was intentionally allowed to flood in 2015 as a result of a water inflow. A response plan was developed and executed, allowing engineers to sink the shaft partially and install an additional ring of tubing.
Like the processing plant, the two connected shafts are operating as planned in test mode. But while the two existing shafts are designed to produce 10-12 million mt/y of ore, their output is restricted by the regulator while in test mode; that restriction was 7.5 million mt/y as of late last year.
Meanwhile, EuroChem is continuing to ramp up production at its Usolskiy potash operation south of Berezniki.
“We believe we are on track at Usolskiy in terms of production, with an output of 1 million mt targeted for this year, and the full 2.3 million mt/y design capacity expected to be reached by the end of next year,” the spokesperson said. “Technically, the plant is still operating in test mode, but there will be a formal ribbon-cutting ceremony later this year.”
Usolskiy produced its first test tons of potassium chloride in March 2018 (GM March 16, 2018), with a total 250,000 mt produced by the end of last year.
Meanwhile, following the opening last week of a $1 billion new ammonia production plant – EuroChem Northwest, in Kingisepp, in Russia’s Leningrad region, with a 1 million mt/y production capacity (GM June 7, p. 1) – the group is now more than self-sufficient in ammonia, the spokesperson said.
He confirmed that EuroChem has plans to build further capacity. He added that the company has signed a memorandum of intent to build further production facilities for ammonia, and also for urea and methanol, with Russia’s Industry and Trade Ministry and Leningrad region authorities.
“The projects represent investment of about $2.5 billion, and we will take a formal decision [on the project] later this year. Time-wise, this is probably a four-year project,” said the spokesperson.
In terms of production capacity, the plants will be capable of producing about 1 million mt/y of ammonia, 1.2 million mt/y of urea, and up to 1.7 million mt/y of methanol, he said.
Meanwhile, EuroChem has decided to go ahead with the building of a fertilizer transshipment terminal in the Russian Baltic seaport of Ust-Luga, a project it halted in 2017. According to Melnichenko, the group plans to raise the handling capacity to 5.5-5.7 million mt/y, up from the originally planned 5 million mt/y. The new terminal is expected to be launched in 2022-23.
The EuroChem spokesperson told Green Markets that the company is continuing its discussions about investment participation in the construction of a dry bulk cargo terminal in the Russian Black Sea port of Taman. There had been reports late last year that EuroChem had abandoned these plans, according to Bloomberg, citing RBC.
Plans for the long-envisaged new terminal, being developed under the auspices of Russian export marine terminal owner OTEKO-Portservice LLC, include capacity to handle the transhipment of 30 million mt/y of cargo, including 5 million mt/y of sulfur and mineral fertilizers (GM May 27, 2016). The remaining capacity would be mainly for coal and iron ore handling.